CDR Dave Julian (Director, Personal Finance)

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CDR Dave Julian (Director, Personal Finance)

  1. 1. Department of Defense Financial Readiness Update CDR Dave Julian Director OSD Office of Personal Finance Military Community and Family Policy
  2. 2. Topics <ul><li>Economic Environment (“VUCA”) </li></ul><ul><li>Financial Readiness Campaign </li></ul><ul><li>“ Roadshow” Events </li></ul><ul><li>FINRA Military Retirement Confidence Survey </li></ul><ul><li>Questions </li></ul>
  3. 3. Economic Environment Credit Crisis Savings Crisis Foreclosure Crisis Banking Crisis Federal Bailouts Market Instability
  4. 4. Trend Analysis: E1 – E4 Self Assessment of Financial Condition <ul><li>Question: “Which of the following best describes your financial condition?” </li></ul><ul><li>Very comfortable and secure </li></ul><ul><li>Able to make ends meet without much difficulty </li></ul><ul><li>Occasionally have some difficulty making ends meet </li></ul><ul><li>Tough to make ends meet but keeping your head above water </li></ul><ul><li>In over your head </li></ul>Percentage answering question at right with responses 4 or 5 Overall trend within error tolerances: fewer Service members appear to be finding it tough to make ends meet or in over their heads – Army slight upturn
  5. 5. Trend Analysis: E1 – E4 Ability to Pay Bills on Time <ul><li>Question: “In the past 12 months, did any of the following happen to you (and your spouse)? Mark yes or no for each item.” </li></ul><ul><li>Bounced 2 or more checks </li></ul><ul><li>Failed to make a monthly/ minimum payment on credit card, AAFES, NECOM account, or Military Star card </li></ul><ul><li>Fell behind in rent or mortgage </li></ul><ul><li>Was pressured to pay bills by stores, creditors, or bill collectors </li></ul><ul><li>Had telephone, cable or internet shut off </li></ul><ul><li>Had water, heat or electricity shut off </li></ul><ul><li>Had a car, household appliance or furniture repossessed </li></ul><ul><li>Failed to make car payment </li></ul><ul><li>Obtained payday loan </li></ul>Percentage answering yes to one or more of the answers to the question at right Overall trend within tolerances: Little to slight increase in members appear to be reporting difficulties with maintaining finances
  6. 6. Good news……? <ul><li>Our Service members and their families are not immune from the storm, but they do have some shelter: </li></ul><ul><ul><li>Guaranteed paycheck </li></ul></ul><ul><ul><li>Spousal employment programs </li></ul></ul><ul><ul><li>Low-cost child care programs </li></ul></ul><ul><ul><li>Medical/dental benefits </li></ul></ul><ul><ul><li>Commissary/Exchange privileges & other installation support </li></ul></ul><ul><ul><li>Special pays & moving allowances </li></ul></ul><ul><ul><li>Tax-free housing and subsistence allowances </li></ul></ul><ul><ul><li>Only 25-30% own homes as primary residence </li></ul></ul>And……
  7. 7. <ul><li>Started in 2003 to reduce the stressors associated with financial issues on Service members and families </li></ul><ul><li>Education, resources, protections </li></ul><ul><li>Federal, state, local/non-profit outreach and programs </li></ul><ul><li>Platform represented by 8 “Financial Pillars” </li></ul>The DoD Financial Readiness Campaign DoD has been emphasizing financial readiness as a critical component of mission readiness long before the current economic crisis: Financial Readiness = Mission Readiness
  8. 8. The Pillars of Personal Financial Readiness Good Credit Financial Stability Routine Savings TSP/SDP SGLI/ Insurance Low % Loans Security Clearance MWR Deployment
  9. 9. Military Saves 2009 <ul><li>22 February – 1 March 2009 </li></ul><ul><li>Events planned at installations world-wide </li></ul><ul><li>Incentivized savings programs at banks & credit unions </li></ul><ul><li>Saver Pledge </li></ul><ul><li>Quarterly themes: </li></ul><ul><ul><li>1 st quarter: Save and Invest </li></ul></ul><ul><ul><li>2 nd quarter: Youth Financial Readiness </li></ul></ul><ul><ul><li>3 rd quarter: Debt Reduction </li></ul></ul><ul><ul><li>4 th quarter: Retirement </li></ul></ul>Build Wealth, Not Debt!
  10. 10. “ The Right Information, at the Right Time, to the Right People” <ul><li>Delivering correct, user-friendly information </li></ul><ul><li>Reaching Guard and Reserve families </li></ul><ul><li>Reaching geo-isolated families </li></ul><ul><li>Meeting emerging expectations of new generations </li></ul><ul><li>“ High Tech-High Touch” </li></ul><ul><li>Building a worldwide, trusted communication system to connect with troops and families </li></ul>Changing Community = Changing Services Challenges The Digital Generation
  11. 11. Military OneSource <ul><li>Military One Source ( www.militaryonesource.com ) </li></ul><ul><ul><li>24/7 world-wide assistance, on-line and by phone </li></ul></ul><ul><ul><li>“ Money” Section </li></ul></ul><ul><ul><li>Telephonic financial counseling or face-to-face upon request </li></ul></ul><ul><ul><ul><li>Effective 17 Nov: Partnership with NFCC </li></ul></ul></ul><ul><ul><li>Mortgage/foreclosure assistance </li></ul></ul><ul><ul><li>Referrals, connections to key helping agencies </li></ul></ul>
  12. 12. <ul><li>Installation/Unit Financial Managers/Specialists </li></ul><ul><li>Military One Source </li></ul><ul><ul><li>Telephonic counseling </li></ul></ul><ul><li>Military Family Life Consultants </li></ul><ul><ul><li>“ Personal Financial Counselors” (PFC) </li></ul></ul><ul><ul><li>AFC/CFP-certified </li></ul></ul><ul><ul><li>On-demand assignments upon installation request </li></ul></ul><ul><ul><li>Briefings, one-on-one counseling, education & training </li></ul></ul><ul><li>Financial Readiness Partners </li></ul>Financial Counseling
  13. 13. <ul><li>FINRA initiative in partnership with AFCPE & NMFA </li></ul><ul><li>Program: </li></ul><ul><ul><li>Personal Finance and Financial Counseling & Debt Management </li></ul></ul><ul><ul><li>Study group webinars </li></ul></ul><ul><ul><li>Examinations </li></ul></ul><ul><ul><li>Practicum hours (scaled) </li></ul></ul><ul><li>200 selectees from 2000 applicants </li></ul><ul><ul><li>172 active participants (11% drop rate) </li></ul></ul><ul><ul><li>All Services, components </li></ul></ul><ul><ul><li>Status: 31 AFC-certified, 7 finalizing cert process </li></ul></ul><ul><li>Practicum hours </li></ul><ul><li>Employment opportunities following certification </li></ul>Military Spouse Fellowship Program
  14. 14. Financial “Roadshows” <ul><li>Purpose: to assist installation commanders in providing financial education and resources to help their troops and families </li></ul><ul><li>Available to installation commanders by request at no cost </li></ul><ul><ul><li>Tailored to the needs of the installation* </li></ul></ul><ul><li>Roadshows feature: </li></ul><ul><ul><li>Financial/Motivational Keynote speakers </li></ul></ul><ul><ul><li>General session presentations & breakout workshops </li></ul></ul><ul><ul><li>Exhibit Hall/Display booths </li></ul></ul><ul><ul><li>One-on-one financial counseling (PFC) </li></ul></ul><ul><ul><li>“ Leave behind” teams </li></ul></ul><ul><ul><li>Practicum/employment support for Spouse Fellows pursuing AFC certification </li></ul></ul><ul><li>Installations encouraged to utilize all installation resources </li></ul><ul><ul><li>Family Centers, Commissary/Exchange, MWR, Legal Services, Chaplains, Child Development/Youth Centers, Schools, Banks and Credit Unions </li></ul></ul>
  15. 15. The Savage Truth on Money &quot;America's Money Answers Man&quot; Sammy the Rabbit John Sileo “ Think Like a Spy” Terry Savage Jason Goodman Guest Speakers Identity Theft Expert Dr. Robert Manning Credit Card Nation
  16. 16. <ul><li>Take Five: What I Wish I Had Known About Personal Finance </li></ul><ul><li>Better Than a Budget: Develop a Spending Plan That Will Keep You On Track </li></ul><ul><li>The Perils of Plastic: Avoid Drowning in Debt... Charge Wisely! </li></ul><ul><li>Dream Big - Plan Now! Make Your Ideal Retirement a Reality </li></ul><ul><li>Pay Yourself First: Why You Should Sign Up for the Thrift Savings Plan Today </li></ul><ul><li>Have You Fed Your Pig Today? Simple Tips for Saving & Investing </li></ul><ul><li>Ready for Everything? Insurance Essentials for the Service Member With or Without a Family </li></ul><ul><li>The Wheels You Want: Successful Car-Buying Strategies </li></ul><ul><li>Home, Sweet Home: Strategies for Home-Buying and Protecting Against Foreclosure </li></ul><ul><li>You’ve Earned It! Making the Most of Your Military Benefits </li></ul><ul><li>Before You Take Off: Financial Planning for Deployment </li></ul><ul><li>Don’t Lose It! How to Protect Yourself Against Identity Theft </li></ul>CDR Dave Julian, david.julian@osd.mil
  17. 17. Roadshow Locations Luke AFB 13 Nov 08 Tinker AFB 5 Nov 08 Fort Drum 5 Nov 08-30 Jan 09 Fort Lewis McChord AFB 4 Dec 08 Grand Forks AFB 29 Jan 09 Goodfellow AFB 24 Jul 09 Fort Sill 9 Sep 09 Pentagon 23 Feb 09 27 Apr 09 MCRD 24 Feb 09 MCAS, Miramar 21Feb 09 Air Force Marine Corps Navy Army Little Rock AFB 2 Mar 09 Buckley AFB 18-19 Sep 09 FE Warren AFB 22 Sep 09 Eglin AFB 14 Jan 09 Scott AFB 5-6 Jun 09 Fort Polk 6 May 09 Lackland AFB 10 Dec 08 Fort Carson 28-29 Sep 09 USS Peleliu 26 Feb 09 NAVSTA San Diego 23 Feb 09 Camp Pendleton 25 Feb 09 Vanderberg AFB 1-2 May 09 Los Angles AFB 26 Feb 09 Beale AFB 7 Jan 09 Parris Island, MCAS 24 Feb 09 Fort Myer May 09(?) WRAMC May 09(?) Fort Belvoir 24 Jan 09 Fort Meade 10 Mar 09 Andrews AFB 18 Feb 09 Bolling AFB 22 Jun 09 NAB Little Creek 25 Feb 09
  18. 18. FINRA Military Financial Confidence Survey <ul><li>Released 19 February 09 </li></ul><ul><li>Purpose: capture military’s attitudes/perceptions about retirement/finances </li></ul><ul><li>Most pressing financial issues: </li></ul>
  19. 19. FINRA Military Financial Confidence Survey <ul><li>Conclusions: </li></ul><ul><ul><li>Military more likely to take an active role in financial planning </li></ul></ul><ul><ul><li>Military has more realistic view of financial requirements/preparations </li></ul></ul><ul><ul><li>More outreach required to raise awareness of TSP </li></ul></ul><ul><ul><li>Military financial educational programs and services are positively influencing financial behavior </li></ul></ul>
  20. 20. Great News! <ul><li>Military Money magazine Fall 2007 </li></ul><ul><li>Americans Well-Informed on Automobile Retailing Economics (AWARE) reports: </li></ul><ul><ul><li>“ America’s military personnel are particularly prepared for this major financial event in their lives, more so than Americans in general….they are more likely than the average consumer to understand the process of buying and financing a vehicle, and to spend time researching their options” </li></ul></ul>1-Credit Card, 2-Vehicle Financing, 3-Furniture/Appliance Financing, 4-Home Improvement Loan Military Members Research Financing Options Respondents who Completed > 3 hrs of Research
  21. 21. How Defense Credit Unions Can Help <ul><li>Continue to provide innovative, low cost products & services </li></ul><ul><ul><li>Incentivized Savings programs (Military Saves?), loan products, ATM fees; SHORT TERM LOANS (to replace payday lending alternatives) </li></ul></ul><ul><li>Be accessible </li></ul><ul><li>Be proactive in providing educational services </li></ul><ul><ul><li>Step up financial educational opportunities </li></ul></ul><ul><ul><li>Meet with installation/unit leadership </li></ul></ul><ul><ul><li>Know your installation Personal Financial Manager </li></ul></ul><ul><ul><li>Attend events, clinics, picnics (Ask about Financial Roadshows at your base) </li></ul></ul><ul><li>Make appropriate referrals </li></ul><ul><ul><li>Military One Source, other DoD financial partner resources </li></ul></ul><ul><li>Know, understand Service members and families </li></ul><ul><ul><li>Local demands, stresses of deployment </li></ul></ul><ul><ul><li>Unique challenges </li></ul></ul>
  22. 22. <ul><li>Join us to help Service members and Families make sound financial decisions. </li></ul><ul><li>Thank you for your 46 years of service to our Military! </li></ul>
  23. 23. <ul><li>Questions? </li></ul><ul><li>CDR Dave Julian </li></ul><ul><li>Director, Office of Personal Finance </li></ul><ul><li>[email_address] </li></ul><ul><li>703-908-6236 </li></ul>
  24. 24. <ul><li>Financial Readiness Partners </li></ul><ul><li>Consumer Federation of America (www.MilitarySaves.org) </li></ul><ul><ul><li>Military Saves Week (22 Feb – 1 Mar 2009) </li></ul></ul><ul><ul><li>Strategies to save, buy big-ticket items, reduce debt </li></ul></ul><ul><li>In Charge Institute </li></ul><ul><ul><li>www.Inchargefoundation.org and www.Militarymoney.org </li></ul></ul><ul><ul><li>Debt reduction/management programs </li></ul></ul><ul><li>FINRA Investor Education Program (www.SaveandInvest.org) </li></ul><ul><ul><li>Bright Score Credit Score Management Program </li></ul></ul><ul><ul><li>Military Spouse Fellowship Program </li></ul></ul><ul><li>Better Business Bureau Military Line (www.bbb.org/military) </li></ul><ul><li>National Military Family Association </li></ul><ul><li>Association of Military Banks of America </li></ul><ul><li>Defense Credit Union Council </li></ul>
  25. 25. Talent Amendment Predatory Lending Law <ul><li>Regulation went into effect October 2007 </li></ul><ul><ul><li>Report due to Congress April 2008 </li></ul></ul><ul><ul><ul><li>Implementation status </li></ul></ul></ul><ul><ul><ul><li>Recommendations for statutory, legislative changes </li></ul></ul></ul><ul><li>Regulation capped at 36% </li></ul><ul><ul><li>Payday loans </li></ul></ul><ul><ul><li>Vehicle Title Loans </li></ul></ul><ul><ul><li>Refund Anticipation Loans </li></ul></ul><ul><li>SASC concerns: installment loans & state enforcement </li></ul>
  26. 26. Report Findings <ul><li>Regulation has had desired impact </li></ul><ul><ul><li>Limited access to storefront payday and vehicle title loans </li></ul></ul><ul><ul><li>Very few cases of “morphing” products to work around law </li></ul></ul><ul><ul><li>Serrvice members did not appear to be left without options </li></ul></ul><ul><li>Sources of high cost installment loans are much more limited around military installations </li></ul><ul><li>Internet is problematic </li></ul><ul><ul><li>Remaining source for covered loans </li></ul></ul><ul><ul><li>Source for high cost installment loans </li></ul></ul><ul><li>Alternative loans are available and in use </li></ul><ul><ul><li>Available in excess of 135 installations through banks/CU’s </li></ul></ul>
  27. 27. Report Conclusions & Recommendations <ul><li>Implementation has been successful </li></ul><ul><li>No further legislation or regulation necessary at this time </li></ul><ul><li>Recommendation: change definition of covered borrower to align with DMDC definition of “dependent” </li></ul>
  28. 28. Report Recommendation <ul><li>Revise the definition of the covered borrower to coincide with the definition used to populate the DEERS database </li></ul><ul><ul><li>Current definition in the regulation reads the same except for an individual who receives 50% of income from a Service member for 180 days prior to receiving the loan </li></ul></ul><ul><ul><li>Cannot include this individual in any database </li></ul></ul><ul><ul><li>DEERS definition: father, mother, father-in-law, mother-in-law who receive 50% of income from a Service member for 180 days </li></ul></ul><ul><ul><li>Change will allow for lenders to verify covered borrowers through a database rather than through a “safe harbor” statement </li></ul></ul>

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